Currently before the Court are the Report and Recommendation ("R & R") (Doc. 233) filed in this case on March 24, 2015, by the Honorable Erin L. Setser, United States Magistrate Judge for the Western District of Arkansas, regarding Plaintiff James B. Mitchell's ("Mitchell") 28 U.S.C. § 2255 Motion to Vacate, Set Aside, or Correct Sentence (Doc. 87), and Mitchell's Objections to the R & R (Doc. 237). In light of Mitchell's Objections to the R & R, the Court has conducted a de novo review of the record, focusing in particular on the portions of the R & R to which specific objections have been made, in accordance with 28 U.S.C.§ 636(b)(1)(C). After review, the Court finds that the objections lodged by Mitchell offer neither law nor fact requiring departure from the Magistrate's findings. Accordingly, the R & R (Doc. 233) is ADOPTED IN ITS ENTIRETY and Mitchell's § 2255 Motion to Vacate (Doc. 87) is DENIED. Because the entire case is dismissed with prejudice, Mitchell's Motion Objecting to Magistrate's Order of Denial on Docs. 223 and 228 (Doc. 235) is DENIED AS MOOT.

I. BACKGROUND

On September 15, 2010, Mitchell was charged in a twelve-count Superseding Indictment, along with two co-conspirators, Tiffney Fedele and Jason Fedele. (Doc. 29). On November 23, 2010, Mitchell entered into a Plea Agreement (Doc. 56) wherein he agreed to plead guilty to two of the twelve counts in the Superseding Indictment. Mitchell pleaded guilty to Count One-conspiring to use an interstate facility to distribute proceeds of an unlawful activity, and to promote, manage, establish, carry on, and facilitate such unlawful activity, namely prostitution, in violation of 18 U.S.C. §§ 1952(a)(1)(A) and (a)(3)(A) ("the Travel Act"), and 18 U.S.C. § 371. Mitchell also pleaded guilty to Count Two-conspiring to launder monetary instruments in violation of 18 U.S.C. §§ 1956(a)(1)(A)(i), (a)(1)(B)(i), and (h). On June 20, 2011, Mitchell was sentenced to sixty months on Count One and one hundred twenty-six months on Count Two, with the terms to run concurrently. Mitchell did not appeal the judgment. On June 25, 2012, Mitchell filed the present § 2255 Motion to Vacate, subsequently amended by a Memorandum of Law in Support of his Motion, asserting nine grounds for relief. (Doc. 139). The Magistrate recommended denying the Motion on all grounds.

Mitchell now offers objections in response to the Magistrate's recommendations as to all grounds. As to grounds one, two, and five, the Court agrees with the Magistrate's determination that these arguments were procedurally defaulted because they were not brought on direct appeal. Nevertheless, the Court will address Mitchell's substantive objections, turning first to those objections that raise ineffective assistance of counsel allegations.

Mitchell objects to dismissal of grounds three, four, six, seven, eight, and nine, citing ineffective assistance of counsel. First, as to grounds three and four, he contends that his attorney, Greg Klebanoff, should have recognized that his conviction was illegal because Congress never defined "proceeds" in 18 U.S.C. § 1952 and did not define "proceeds" within 18 U.S.C. § 1956 until after the Supreme Court's ruling in United States v. Santos . Thus, Mitchell argues that the term is ambiguous and should be construed in his favor, under the rule of lenity, as "profits, " rather than "receipts." If the terms "proceeds" is construed to mean "profits, " Mitchell maintains that his conviction for distributing the proceeds of prostitution and money laundering of the same proceeds should be vacated because he did not profit from unlawful activity. As to ground six, Mitchell asserts that Klebanoff should have recognized that his plea was involuntary and unknowing because he was induced to plead guilty based upon the Government's false statement that his co-conspirators would testify against him in a trial. As to ground seven, Mitchell maintains that the elements of promoting a commercial sex act involving a minor were not met, and therefore his sentence was illegal. As to grounds eight and nine, he contends that Klebanoff provided ineffective assistance of counsel when he failed to argue that enhancing Mitchell's sentence by considering his criminal history and adding a term of supervised release is a violation of the Fourteenth Amendment.

Next, as to ground one, Mitchell argues that he was denied his Sixth Amendment right to counsel of his choice when the Court did not conduct a "disqualification/waiver hearing" after the Court had been apprised of an alleged conflict of interest posed by Mitchell's former attorney, Erwin Davis. As to ground two, Mitchell argues that the charges against him were false due to prosecutorial misconduct in inducing him to plead guilty. Lastly, as to ground five, Mitchell asserts that the Government breached the terms of the plea agreement by bringing the charge in Case No. 5:11-CR-50033, as it stems from activities described in the Superseding Indictment in this case, because the proceeds from the escort business are the same proceeds he had fraudulently under reported on his application for social security benefits.

The Court will address each objection in turn.

II. DISCUSSION

A. Ineffective Assistance of Counsel

The Sixth Amendment right to counsel extends to the plea-bargaining process. Lafler v. Cooper, 132 S.Ct. 1376, 1384 (2012) (internal citations omitted). Under the two-part test announced in Strickland v. Washington for determining the validity of an ineffective assistance of counsel claim, Mitchell must show that counsel's representation fell below an objective standard of reasonableness and that there is a reasonable probability that, "but for counsel's unprofessional errors, the result of the proceeding would have been different." Id. (citing Strickland v. Washington, 466 U.S. 668, 688 (1984)). Under the deficient performance prong, Mitchell must show that counsel "made errors so serious that counsel was not functioning as the counsel' guaranteed [him] by the Sixth Amendment." Id. (citing Strickland v, 466 U.S. at 694). If a defendant fails to show deficient performance by counsel, the Court does not reach the prejudice prong of the analysis. United States v. Walker, 324 F.3d 1032, 1040 (8th Cir. 2003). The scrutiny of counsel's performance is highly deferential, and there is a presumption that counsel's conduct fell within the wide range of reasonable assistance. Id. at 689.

1. Grounds Three and Four: Counsel Failed to Argue Defect Based on United States v. Santos

Mitchell raises an ineffective assistance of counsel allegation in regard to counsel's failure to raise the Santos argument. See United States v. Santos, 553 U.S. 507 (2008). Mitchell contends that he received ineffective assistance of counsel when Klebanoff failed to argue that the Government could not prove him guilty beyond a reasonable doubt as to Counts One and Two because the term "proceeds, " found in 18 U.S.C. §§1952 and 1956, is ambiguous, in that it is not defined in § 1952, and was not defined within § 1956 until after the Supreme Court decision in Santos. Mitchell contends that he could not have been convicted for the "distribution of prostitution regardless of which definition of proceeds is applicable (profits or receipts) because the agency fee' charged to customers did not include any kind of sexual activity between an escort and a customer." (Doc. 166, p. 67).

As correctly stated in the R & R, when Santos was decided in 2008, the federal money laundering statute at 18 U.S.C. § 1956 did not define the term "proceeds." A divided Supreme Court found that proceeds referred to profits rather than receipts, in the illegal gambling context. However, following the Supreme Court's holding in Santos, Congress amended § 1956 to define the term "proceeds" to include gross receipts. Fraud Enforcement and Regulatory Act of 2009, Pub. L. 111-21, § 2(f)(1)(B), 123 Stat. 1617, 1618; see ...

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